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This Week in Startups
IPO Mania hits the TWiST 500! Three companies are ready to go public | E2206
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- [00:00]
Jason Calacanis
If you can't get a job and you can make half the amount of money or double the amount of money or any of those numbers in between working for yourself and having a small mom and pop business, you're going to do it. People used to do it, they're going to be doing it again. Not out of a function of wanting to necessarily, but as a function of needing to. I think it's going to be a situation where we're already seeing with college graduates, they don't have jobs, so what are they going to do? They're going to start companies, they're going to try to find a product or service they can provide to other companies, to consumers, and put out a shingle and try to get money for a product or a service from individuals and it's going to be every person for themselves. It's going to take a lot of self reliance and rugged individualist. I predict when this transition occurs and the transition is occurring and it's creating a low anxiety in the country, it's creating a low anxiety in households where people are like, I kind of feel like my job's going away. I kind of feel like my cousin's job is going away. I wonder how long I'll even have this job. And the managers are saying, I wonder how long I'm going to have my job. I wonder how long you're going to have your job. I'm also wondering that because if I don't have 10 people to manage, then why am I here? Yeah, why do they need me? If you're not here, why do they need me? I'm a middle manager.
- [01:23]
Alex Wilhelm
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- [02:11]
Jason Calacanis
All right everybody, welcome back to this week in startups. I'm your host Jason Calacatnis. With me again Alex quote will Helm, my co host. I am reporting from Tokyo. Last time I was in Dubai and before that Riyadh, the world Tour continues. I'm here to make a quick announcement on Friday that we're going to be doing the Founder University program here in Tokyo, just like we started in Riyadh. Had a great time in Riyadh. 60 great founders building great companies. And Founder University, if you want more information about that, will be opening up applications for Tokyo in a month or so.
- [02:47]
Alex Wilhelm
30 companies. 50 companies. 60 companies. Are you going to get arm twisted to 75 this time? What's the idea?
- [02:53]
Jason Calacanis
We really want to be able to spend time with each company. And so if you're going to meet with each company every week, you got to keep it to probably 50 or less. Too many companies, it's just not possible. Right. And so you want it to be bespoke enough that the founders can ask a question and meet with the investment team and, you know, just get a nice experience. So we don't want to push it too hard. Not too many companies.
- [03:16]
Alex Wilhelm
Well, I was thinking about you this morning because I saw this story over on cnbc and it just essentially discusses a report, Jason, that shows that a lot of Japanese investors are putting money into Europe. But what a great time then if there's capital available locally to Japan to build more companies in Japan, why not?
- [03:33]
Jason Calacanis
This is still the third largest economy in the world, that the Japanese economy. So it's a major player, punches well above its weight with 100 million citizens. And they used to often build products and services for the rest of the world. A lot of the entrepreneurs. Now there's such a big market here. We'll just focus on the market here. So it's going to be really interesting to see how many of the founders are building just for Japanese customers and how many are building also for US customers. So I'm excited to get started on that. And I have been eating my way through Japan.
- [04:09]
Alex Wilhelm
Yeah. Here is a tweet from you that has more exclamation points than a middle school group text. What? What, what is this here? What is a six banger? What is PST Pizza? What are you doing over there?
- [04:25]
Jason Calacanis
Well, PST Pizza happens to be a great pizza place. The pizza here is like best in the world, some people might say better than Italy or New York and it wouldn't be wrong. It's pretty great. So when you are a foodie and you go have dinner twice, called a bang bang, I thought that's what you're referring to. Yeah. And so we started early this morning here with a couple friends and we, we did two breakfasts and then we went to this really great breakfast place, center bakery, to have this incredible French toast. And then we. It just. The whole day went on, and all of a sudden we had been to, you know, six and a half places in the course of a day, and it was crazy, but awesome and delicious. Now, you don't eat a full meal when you do this. Bang, bang, right? Two lunches, two dinners, two breakfasts. And then we went to a vinyl bar. Big tradition here. It's really kind of interesting when you think about people wanting to spend more time together. We went to this great vinyl bar. Yeah, you can see there a picture of it. And yeah, there's a Yamazaki, but you see that speaker and that beautiful Macintosh there. And I think a talon, I think they called those speakers. Anyway, those speakers are from like the 60s or 70s and they spin vinyl and you go. It's a very interesting experience. You're not supposed to talk too loud in the listening situation. They play vinyl. You can pick marbles from, like little jars on the car. The different colors are different decades. Another type of color is a type of music. So if you want soul music from the 70s or jazz from the 80s, you can pick, like different marbles and you put them down. And then the DJ will go pick from their thousands of records which records they have. But the. The. The sound systems and the sound stage is just so amazing. And it's like a new experience for going out. You. It's. You go out, you have a nice cocktail or something, and you listen to these incredible speakers. And I've been talking about that a lot that I got into high fidelity.
- [06:36]
Alex Wilhelm
Stuff like Qobuz and so forth.
- [06:38]
Jason Calacanis
Yeah, yeah, I listened to that French service, Qobuz, which has the high fidelity of things. And just the Japanese do everything as perfectly as possible. So I got to really enjoy that tonight. It was. It was wonderful.
- [06:52]
Alex Wilhelm
Really, really Quickly, Jason, best thing you ate today. And why has Japan, or how has Japan managed to make single malts that actually really do, I think, challenge Scottish dominance?
- [07:04]
Jason Calacanis
I don't know exactly how they got there, but yeah, the. The scotches are just pretty amazing. The whiskeys. And gosh, today I would say the pizza was pretty amazing. But in the morning, we had this French toast that is kind of the greatest French toast in the world as a dish. That might be my favorite.
- [07:22]
Alex Wilhelm
Best French toast in the world. Oh, man.
- [07:25]
Jason Calacanis
Center of the bakery in Ginza, gins is like the Beverly Hills, and they make this really crispy, toasty one in the inside. It's almost like it's pudding it's so soft and delicious on the inside. It's great juxtaposition.
- [07:37]
Alex Wilhelm
I know it's 11pm where you are, but it's. It's 9:08 in the morning for me, so you're killing me. All right.
- [07:42]
Jason Calacanis
Killing you with the French toast. Yeah.
- [07:44]
Alex Wilhelm
Let's get started.
- [07:45]
Jason Calacanis
What's in the news? What's happening since I've been on the road?
- [07:47]
Alex Wilhelm
So somehow we have to talk about Catholicism on the show today because Mark Andreessen, a famous investor, co founder of a 16z the story venture capital firm that really changed the fun size game, you might say. Jason, in the last 10, 15 years has been a fan of memes. Now I'm blocked by Mark on Twitter, so we had Marcus pull some screens for us. The Pope, Pope Leo the 14th did a post discussing technology and innovation and the fact that it carries a, quote, ethical and spiritual weight, to which Marc Andreessen responded with this. This is a recent meme that came out of a Sydney Sweeney interview. We don't have to get into that.
- [08:26]
Jason Calacanis
I'm aware of it.
- [08:27]
Alex Wilhelm
Yeah, he's being dismissive, Jason. Right. Mocking almost of this. And this led to growing Daniel, an early Apple employee, and I would say a well known Twitter wag, if you're into that kind of phrasing, responded, quote, don't mock the Pope. And this then devolved into a bit of a controversy.
- [08:46]
Jason Calacanis
What is the controversy here is was he literally mocking the Pope in some way? You know, it's hard to tell here.
- [08:56]
Alex Wilhelm
So he was using the interviewer lady meme as a way to, I think, dismiss moral scolds. The context is that the interviewer asked Sydney Sweeney, I believe, you know, I wanted to give you a chance to condemn white supremacy or something. And Sydney was kind of like, I'm not going to do that.
- [09:12]
Jason Calacanis
So Mark is saying, I'm going to ask you to explain yourself. And yeah, it just sounds like it just didn't land at my company launched. We have a rule about returning phone calls on the same day, if not faster. It's just core to any business to be responsive to your customers. And missed calls equals missed opportunities. That's why your company should think about signing up with Quo. You know, Quo, they used to be called open phone and they are the number one business phone system that's built for 2025, not 1995. With Quo, you can take calls from anywhere, your phone or your computer, and your whole team shares just one number. And you're going to get AI summaries of every call. And you're going to get the context routed straight to the next available person and no one is ever left hanging. Pull. Plus, they just introduced Sona, the always on, totally customizable AI agent that takes calls when you're not available. And then Sona is going to capture all the important information and hand it off to your team. Quo is offering Twist listeners 20% off your first six months. And get started for free by going to quo.com twist that's Q-U-O.com twist. You can even keep your existing number for free@quo.com twist.
- [10:32]
Alex Wilhelm
Well, one, he's been criticized for using the meme incorrectly, but everyone thinks that he's being dismissive. The Pope said that the Church calls on builders of AI to cultivate moral discernment as a fundamental part of their work, to develop systems that reflect justice, solidarity and a genuine reverence for life. The context I think that maybe I should have added, Jason, is that Markin's recent technology optimism manifesto discussed how any efforts to slow the progress of AI is tantamount to murder because it could harm people in the future that could have benefited from, let's say, better drug discovery.
- [11:02]
Jason Calacanis
Okay.
- [11:03]
Alex Wilhelm
And so I think he's viewing the Pope here essentially as similar to the lady interviewer, a moral scold and essentially a woke entity. Now, normally that kind of criticism in technology land doesn't generate controversy, but in this case, it turns out there is a pretty strong group of Catholics who are serious about this and don't like it when people mock the Pope, which, fair enough, the Pope has also been discussing the need for common good in business and so forth. So I think he's essentially saying capitalism is not everything. And some American hyper capitalists got into a bit of a mix about this. This led to Daniel, the Apple, early Apple employee and so forth, saying that, quote, mark primarily funds gambling apps, cheating apps and bot farms. He does not want you to build things that are good for society. So here we see a moment in which there is an intra technology split over theological differences and really kind of bringing to bear what do VCs and investors have in terms of moral requirements. We talked about vice clauses back in the day.
- [12:01]
Jason Calacanis
I actually published it this on hey, like we need to really think about job displacement and nobody wants to talk about it. But let me just, you know, reiterate why I keep talking about it because a company like Amazon is moving at quite a clip to get rid of employees, even if they say that they're not doing it for AI, which, you know, I don't know, Alex, if you've ever seen this before, but I hate to break this to you as a lifelong journalist, but there have been instances where VCs, or even CEOs. Yes, dare I say, might say something that doesn't exactly correlate with how they actually feel. It might not be exactly in line.
- [12:49]
Alex Wilhelm
All those job cuts, Jason, are not just to drive efficiency and reduce layers of management. They're to cut costs. No.
- [12:55]
Jason Calacanis
Or like that. They might be AI related, I think is the, you know, the point here, like, sometimes when you don't hire people or you get rid of people, it might not just be because AI today is like, did their whole job. It just might be it did a third of their job. Or it's obvious, the writing's on the wall that people using AI at the company are going to be able to do 20% more every quarter. So therefore, we're on the trajectory to definitely not needing those people anymore. So we might as well get rid of them now and we might as well not hire people because as I've said many times, if you're going to invest in something, why not invest in an AI solution to the problem, a technological solution to the problem, rather than investing in, you know, more headcount, which then you have to be, you know, theoretically, you need to be a bit loyal to and keep them around. And you spend a lot of time recruiters hiring desks.
- [13:52]
Alex Wilhelm
Yeah.
- [13:52]
Jason Calacanis
If you can avoid all that and just use software, you're going to. And that's it.
- [13:57]
Alex Wilhelm
I just pulled it up on the screen. You can find it over on Jason's Twitter or calcanist.substack.com, it's called the terror of the great AI displacement. Just to walk people quickly through your argument, essentially you say that for a long time people in tech have been saying, hey, we're going to automate these unnecessary jobs. A lot of them were too early. But it does seem now that the technology has reached the point to which it's possible. And your evidence is, quote, the industry knows this time will be different or we wouldn't be spending a trillion dollars on data centers in five years to capture billions. This opportunity essentially trust where people put their checks, not their mouth. And then where will this hit? You discuss factory and warehouse and delivery work, which you say is about 15% of the domestic workforce. Fifteen percent, by the way, is nearly one in six jobs in the country. And Uber, Walmart and Amazon have about 4 million people enrolls that are applicable there. Further evidence, Amazon is cutting Both white collar staff and investing in robotics to get rid of future workers in warehouses. So what does the future look like? I think you've said this before on this show, Jason, but quote, no human will touch your package between the time you one click and you or your humanoid robot unbox it. Essentially what we're seeing here is, yes, automation is cutting jobs or impacting them. I just don't get why people are being so coy about this.
- [15:11]
Jason Calacanis
Yeah, that was why I took the time to write it was because I think people are pretending it's not happening or want to say like we don't really have any evidence of it. But then if you talk to anybody working in corporate America and certainly in startups, they're like, wow, we're getting so much leverage from this. We probably don't need that extra position. Or we can probably just script this with AI and get it done now. Yeah, you'll point to obvious instances where AI is not perfect, but I've given this example many times. You know, if you're going to write a job description as a paradoxical example, it's going to do a better job than an HR person and you're going to sort resumes, it's going to do a better job than an HR person and people are doing those kind of things. So it's happening folks. And I just thought I'd write it down on paper here to remind people. Look at what these companies and leaders do, rather what they're saying or what to other technologists or other politicians are saying. The fact is you're not investing a trillion dollars in Data Centers and H1 hundreds and paying people $10 million a year. If this isn't going to displace all those jobs, if self driving is not going to work, people are not going to invest and build 100 million self driving cars. But they are building that many self driving cars. That's the plan. Yes. You could just talk to all the OEMs, talk to Uber, talk to Tesla, talk to Waymo, you know, Baidu, they're all have plans to build millions of cars collectively tens of millions and eventually hundreds of millions. So it's happening. We are going to need to talk about it. I don't know if it's going to be a displacement, Alex, that's going to be so fast that we can't keep up with it or we can, I suspect it's going to be somewhere in the middle and I'm going to write a second and third piece. So if you go to Calican substack.com you can sign up and I'm going to write a second and third piece just to talk about what you can do as an individual to not be one of the laid off people or displaced people, which is a combination of obviously learning how to use these tools and be one of the survivors or starting your own product service, being a founder. Those are I think the two cleanest paths for young people and then also what society can do. And there's a lot of things society can do if we have big job displacement.
- [17:36]
Alex Wilhelm
Going back to our panel from last Wednesday, we were discussing, I think you know, how many people are there to found companies and how many great companies are built each year. Your statement there about getting people to go out there and kind of start their own service or business. Do you think we're going to see an explosion in 1, 2, 3 person firms that are not venture backable Jason per se but are just like good SMBs as people become less attached to Amazon or big tech style employment?
- [18:02]
Jason Calacanis
If you can't get a job and you can make half the amount of money or double the amount of money or any of those numbers in between working for yourself and having a small mom and pop business, you're going to do it. People used to do it. They're going to be doing it again. Not out of a function of wanting to necessarily, but as a function of needing to. I think it's going to be a situation where we're already seeing with college graduates, they don't have jobs, so what are they going to do? They're going to start companies, they're going to try to find a product or service they can provide to other companies, to consumers and put out a shingle and try to get money for a product or a service from individuals and it's going to be every person for themselves. It's going to take a lot of self reliance and rugged individualists. I predict when this transition occurs and the transition is occurring.
- [18:54]
Alex Wilhelm
Yeah.
- [18:55]
Jason Calacanis
And it's creating a low anxiety in the country. It's creating a low anxiety in households where people are like I kind of feel like my job's going away. I kind of feel like my cousin's job is going away. I wonder how long I'll even have this job. And the managers are saying I wonder how long I'm going to have my job. I wonder how long you're going to have your job. I'm also wondering that because if I don't have 10 people to manage, then what am I? Good, then why Am I here? Why do they need me if you're not here? Why do they need me? I'm a middle manager. You folks have any idea how many documents and spreadsheets I got to look at every day, every week, every month? I'm reading this ad offering document right now. I'm going to need my own personal data center soon. But this is why there's Coda. It's the all in one collaborative workspace that's not only helping us here at launch, but working for over 50,000 teams all over the world. And they've got an amazing new feature that we've got to tell you about. It's called Coda Brain. It's an AI that's been trained on all of your company's data and information that syncs to all of the tools you're already using. Coda Brain is not just going to eliminate constant searching and keep you organized, but it also crunches the numbers and provides you deep research and insights just based on simple prompts. And because it's powered by Grammarly, you know you're going to get clean, clear, crisp responses that are easy for you to understand. So go right now to Coda IO Twist and get six months of the team plan for startups free. That's C O D A IO twist for six months free.
- [20:32]
Alex Wilhelm
This actually is a great thing to bring up right now because I've been trying to figure out what's changed in the last two weeks, but it feels like, it feels like someone turned the lights on and we're all still at the party, you know, and everyone's kind of looking around going, oh, now what? I don't know if it's, you know, concerns about AI investment that's making everyone freak out or just geopolitical tensions, but it does seem to me that the vibes have kind of turned bad ever since you've left the country. Now, I'm not saying you leaving did that, but like, you left and so I think you've missed it maybe, maybe because you've been in, you know.
- [21:02]
Jason Calacanis
No, no, no. I, I, I, I, I made this joke, like, what happened? The AI bubble popped. Sam Altman went on, Brad Gerstner lost, Bill Gurley as his co host and he popped the AI bubble all in the same week. But there was something to be said for that. People were wondering this whole time, like, wait, where, where's the $1.4 trillion going to come from? And for the last two, for the last year, we've been talking about round tripping, right? The first this show the finance, the tech spaces. When we see people start self dealing, hey, I'm going to sell you a bunch of these chips and you're going to pay me a bunch of money and I'm going to invest in your company. We're like wait a second, how does that work exactly? You round tripping the money. And so once people saw that chart of how intertwined everything was, that was the first reason to think, wait a second, what's going on here? The second thing people saw was one of the companies OpenAI doing all this weird shenanigans. Public Benefit Corporation, private company credible valuations. And then they did a flurry of deals all in the same couple of weeks. Remember there was like the Nvidia deal, then the AMD deal, then a Amazon deal, then the Microsoft renegotiation deal. And you start to see like all that renegotiation, Oracle deal came in at the same time for $1.4 trillion. And those, we talked about it here, are those guaranteed?
- [22:27]
Alex Wilhelm
Yeah.
- [22:28]
Jason Calacanis
Where does the money come from? How does 300, $400 billion show up in, in Oracle's bank account to pay for this stuff? Well, when Sam gave that answer, which you know, maybe he was tired like I am right now, maybe he's on the road, he's exhausted. I feel you can happen. And he gave a, you know, a little bit of a cheeky answer. Maybe he was trying to be funny and be a cheeky monkey, you know, and say hey, I'll buy your shares back. But that moment I think made people think, huh? I wonder if he really actually can pay that 1.4 trillion dollar bill. And if he doesn't, And Oracle went up, remember that day, Oracle went up 15 or something.
- [23:03]
Alex Wilhelm
Oh yeah, $150 billion in free market cap.
- [23:06]
Jason Calacanis
Yeah, yeah. And you're like wait a second, does that make sense? And so now people are saying, hey, maybe this isn't all it's cracked up to be. So two things can be true at the same time. Yeah, there is a bubble. This is getting too big. There's a lot of open questions about can this actually, this build out actually be funded? Is the electricity going to show up? Are people going to protest the self driving cars in the street? Are they going to protest electricity tripling or doubling for residential when you know, some great data center starts sucking down all the power? This is what happens during a massive paradigm shift. I remember during the dot com boom these similar questions happens. Would there be a movie industry, a book industry? What would happen to newspapers? All of these things happen. Now what happened to newspapers and magazines? They got walloped.
- [23:58]
Alex Wilhelm
There was a lot of destruction. People talk about, you know, like, oh, people were overselling it. But honestly, magazines have been reduced to a couple of, of of of iterations. Even in airports, like it's hard to find the Economist sometimes Jason, they're in fact received. It just took a while.
- [24:11]
Jason Calacanis
Yeah, it was like another 15 years, very quick 10, 15 year deflation of newspapers. If you look at the newspaper and magazine revenue chart, it's like this giant bell curve. It just fell off a cliff at some point. And people stopped using advertising classifieds and subscribing to newspapers and buying them on newsstands every day. And same with magazines. All that went online. And you see the online advertising chart, it's just the two cross each other at a certain point in the 2000s and you're like, yep, that's what happened.
- [24:45]
Alex Wilhelm
Here's a version of the chart you're talking about, Jason. It's not the absolute, the absolute best one. But this is from I think some Google information. This just shows the, the rise of Google's revenue from 2003, 2013 compared to a decline in newspaper revenue. Not exactly correlated, Craigslist, et cetera. But there's an, that's what Jason's talking about.
- [25:06]
Jason Calacanis
Newspapers and Google itself. And you don't have Facebook in there either. And yeah, the new. As the newspapers go down, Google goes up. Why? People used to, you know, advertise their cars, their classifies, you know, local car dealership.
- [25:21]
Alex Wilhelm
Here's the other side of this. So I was thinking about the good and the bad. The bad is people thought the economy probably shed jobs in October. The stock market sold off 3 or 4% last week, etc. The good news Jason, is that GDP growth for Q4 looks pretty hot. We're at about 67% chance of another rate cut in December. It's only a month away. HyperCaler earnings for Q3 pretty good overall. OpenAI does expect to reach 20 billion in ARR this year and the shutdown might be coming to a close. So I would say that yes, the vibes have gotten kind of crappy, but a lot of the, a lot of stuff hasn't actually changed and looks okay. So I'm not as worried as I think a lot of people are.
- [25:58]
Jason Calacanis
There's a wall of worry that's growing for people. Consumer debt is high, interest rates have not come down as fast as people have wanted them to. Those that will probably happen. The inflation rate has gone back up to 3%. It was supposed to go down to 2. So that hasn't happened. And it had flirted with 2.3, 2.4. We talked about it here. Young people can't get jobs. There's been, there was a flurry of layoffs. So yeah, whenever you have these transitionary markets, one side's going to win the argument. It's either going to be a recession will break out and we'll have two quarters of negative growth in a row and you know, the stock market will correct a bit or we're going to have this choppiness until people get confident again. If people don't have jobs in the that the unemployment rate is the one to watch. When the unemployment rate is low, which it is still, it's 4 point X or something. 4.4. When you have an under 5% unemployment, you have plenty of people out there with money to spend. We live in a consumer driven economy so things will be fine. If that gets up to 6% or 7%, that's when you start to say, huh, something's going on here and people are not spending money. And then people stop buying on Amazon, they stop taking trips, then you know, Carnival Cruises, you know, United Airlines, the.
- [27:21]
Alex Wilhelm
Gap, everything starts to show visa, etc. Yeah. Here's a chart of unemployment in the US this is via Fred. As you can see, unemployment kind of bottomed out here, Jason, at about, oh, I don't know, 3.4% in early 2023 and has risen all the way up to 4.3% as of August in this data set. Again, the government shut down data is a bit delayed, but an upward trend there, very modest. Let's say you're a startup and you have less than 12 months of Runway. With the current vibes being what they are, Jason, would you recommend that that startup go out and try to raise a little top up or just get their Runway over 12 months or be cool, be calm and just fundraise on your current timeline that you had before.
- [27:59]
Jason Calacanis
You know, most capital allocators I talk to think we've got another year, year and a half of boom market doesn't mean it's going to crash. But you know, could be a recession, could be a pullback. So most people are thinking, hey, we got a year or two of good times left. What that means is you're probably pretty safe if you got a year of Runway and you're getting some reasonable traction. But it never hurts to fill up the gas tank and you got to play the game on the field. If you got competitors and you're there deploying capital and there's a big opportunity to get customers, you're going to keep trying to grow your company. If you are a nascent company, all that matters is getting product market fit. So you, it's not one size fits all if you're under. If you don't have product market fit, in other words, customers are not delighted by your, your product or service and they're not spending money on it. Just focus on that. Don't worry about raising money, don't worry about anything but finishing your product and making sure it connects with customers. Because that's when the actual startup game really starts. You know, where the second half of it starts, there's pre product market fit, post product market fit. Just a fancy way of saying consumers are willing to pay or use your product and get value from it. And if they're not, you got to stay in the lab. Now, if you've got a growing business, you know, and it was Uber or Airbnb or Coinbase or Robinhood, and you're paying a lot of money to acquire new customers, yeah, you could still do that today. They'll probably be money for you in 2026 to keep raising if you're growing. But no business with money in the bank goes out of business. I very rarely see a company with money in the bank. It has happened. They'll just be like, hey, you know, we don't have a business here. We're going to be mature and return what's left to the investors. Generally doesn't happen. Launch is a fast growing organization. We've got more than a dozen employees working with me here in Austin and another dozen spread out all over the world. But there's so many moving parts when it comes to hiring and managing employees. There's the onboarding, of course, payroll, you got to pay them. And listen, I've got all these podcasts to do. I don't have time for payroll, benefits, hr, taxes, answering questions, nor do I want to hire a full time person and then have them do five hours of work a week. No, I have the perfect partner, Gusto. They're the all in one payroll and benefit product that's built just for your small business. Easy to use, it's incredibly fast to get started. And it's designed specifically with remote offices in mind. And Gusto is not just giving you helpful tools. They're going that extra mile to keep your workers happy and keep everything running smoothly. And they're now offering level funded health plans to Keep. Keep your insurance costs down and on demand. Pay to help workers get access to their cash faster without paying extra interest or hidden fees. So here's your call to action. We want you to try Gusto today. So we're giving you three months free when you run your first payroll. That's right, three months free. F R E. That's my favorite price, folks. Go to gusto.com twist that's Gusto. G-U-S T O.com twist what an amazing service and a partner. Great partner.
- [31:02]
Alex Wilhelm
Did I show you the best definition of product market fit I've ever seen? No, this came out a couple days ago. This guy Ayman, he was the former CEO of AppSumo. He grew them, he says, from 3 to like 80 million ARR. He was doing a thread of his observations about being in business, and this just made me absolutely die. He writes over on Twitter or X. You don't have true product market fit until it feels like you're wearing a meat suit in a dog park. Work. Keep iterating who you serve and what you offer until that's true. That's a great definition, Jason. And I think it puts a pretty high bar on pmf. I like it.
- [31:34]
Jason Calacanis
That's essentially talking about market pull, which is the final stage of product market fit. If people are calling you and they're telling you how many they want to buy, you go from like calling people and they don't return your call. Then you call people, they take the meeting, but they don't buy the product. Then you call, they take the meeting, they buy the product, they stop using the product. Then they, you know, call. Most of them buy the product, most of them get value from and use it. Very few churn. Okay, now you got a real business, and then there's a point in time where people are like, I need some of that. And they just call you and throw money at you. And that happened to Uber. Doordash is a good example of it.
- [32:17]
Alex Wilhelm
PayPal, back in the day, when PayPal launched its service on ebay, its servers were just. Just immediately destroyed because everyone wanted it so badly. Amazing.
- [32:27]
Jason Calacanis
It's an amazing feeling when you're just selling hotcakes, but it's very rare. And most founders are just stuck in that, trying to get people to even care and get them to even try it. And that's why startups are not for everybody. It's a. It's a. It's a really hard slog, the macro stuff. I always try to get founders to not worry too much. About it's good to know about them, especially when you're going to go public later. That's when it becomes into play because you do have to time. When you're a later stage, you have to time deploying large amounts of capital with the eventual goal of going public. So the first five years you might be getting that product market fit, all of a sudden you're the guy in the dog park with meat on them, getting surrounded and attacked for their product. Then the countdown clock begins. Okay, you got 20 million, 50 million, 100 million, 200 million in revenue. Okay, when does this thing look good enough and is predictable? Has predictable enough revenue to go public so people can get an exit. And that's like kind of the second half or the, you know, the last third of the, of the journey to public becoming a public company.
- [33:29]
Alex Wilhelm
Let's keep moving on. Stay on the startup train here. Jason, there's a company called Giga that recently raised $61 million in a series A. There was some relatively mean comments about their announcement video. They did a little clip of the founders talking about their round. People were mean about that. I don't think we should spend a lot of time talking about people calling people ugly.
- [33:49]
Jason Calacanis
They call people ugly. I mean, let's just explain it so people understand what happened. Two Indian guys did a launch video. They look like developers. They're not like Tom Selleck and Brad Pitt neither.
- [34:02]
Alex Wilhelm
You and I, no, you and I are not getting called by Hollywood. Here's, here's the mean tweet. So what did he say in the tweet? Well, red flags everywhere. Quote, when we hit 10 million arrow, we're going to spend 100k on illegal stuff. We're doing X.
- [34:15]
Jason Calacanis
What does that mean? Like drugs or Vegas trip? They just like blank there. Okay.
- [34:20]
Alex Wilhelm
Next thing he says is we're doing quote something in MRR monthly recurring revenue while the dashboards in HQ show 6x less bait and switch on title, start date, comp, etc. He also had two international weddings that he needed them to pre approve to take time off. They said yes, quote, after I signed contract, they said, well, you need to pick who you're better friends with because you can't do both weddings. Now one of the founders also said, I chopped off a goat's head in India because it brings good luck. And then seven days a week in the office, 12 hours a day, no time.
- [34:50]
Jason Calacanis
That was a crazy one like that. They were requesting people be in the office seven days a week, 12 hours a day.
- [34:56]
Alex Wilhelm
That's bonkers 997.
- [35:00]
Jason Calacanis
Okay, sure. Yeah. Now it's 997. The lying about ARR is securities fraud. If it was true, if you were raising money and you were lying about it or exaggerating it, sometimes founders do that. This is all alleged. I don't know if this guy's. If any of this is true, but he did put the offer letter in there, so seems pretty real. Has any other news source confirmed this or talked to this guy?
- [35:24]
Alex Wilhelm
No, not that I'm aware of.
- [35:26]
Jason Calacanis
We haven't confirmed that. But he did put an offer letter in there. So this is kind of a serious out. These are very serious allegations. Like.
- [35:35]
Alex Wilhelm
Oh, to be clear, this is. Yeah, these are allegedly. It's all over the place.
- [35:38]
Jason Calacanis
But it's very serious allegations to make against the company. The last part of it's kind of what I thought was some of the most interesting. This Guy drove like 24 hours, moved his himself to go there. Now when you do that. And then he met the founder, and the founder was like, very dismissive of him or didn't shake his hand or something that I think, like, really apparently pissed him off enough that he decided to essentially become a whistleblower here. And who knows if this is actually true or not, but it does feel like it is. And the reason I brought it up was because it's. Or, you know, I brought it up when we were talking in our production chat room. You have to treat people well. And if you treat them this poorly and they do something like this, and if any of this is true, these investors could take their money back. This could have like a cataclysmic series of events. All it takes is for somebody to just send this to the sec. As an example. If you raised money. If you raised money and then sent it to and then said, oh, somebody came in and you were making the wrong amount and the dashboard had a different amount of revenue, somebody's going to want to take a look at that. The SEC might be interested in seeing that. The people who just invested might be interested in seeing that.
- [37:07]
Alex Wilhelm
$61 million is a lot of money.
- [37:09]
Jason Calacanis
Just straight up to raise. Yeah.
- [37:12]
Alex Wilhelm
For a single round. Two things, Jason. One, the Hindustan Times did cover this. The founders are IIT graduates.
- [37:18]
Jason Calacanis
I have never heard of that. Hindustan Times. Is that a legit pub? Do you know? Have you heard of them before?
- [37:23]
Alex Wilhelm
Yes, yes, yes. They've reached out. Haven't. Haven't heard back. Also elsewhere in the comments, Jared Steele, the man who shared the alleged quips and quotes from the Company says that other employees have reached out to him, so we may hear from other staff in the coming days.
- [37:36]
Jason Calacanis
It's just super spicy.
- [37:38]
Alex Wilhelm
This speaks to the current moment in technology that this is indicative of how founders are acting as if there is not holier than thou per se, but like just maybe a strain, a strain of arrogance to some degree. And treating people like Legos versus humans.
- [37:55]
Jason Calacanis
This is entitlement, I guess. Or sometimes people, when they raised a lot of money, I've seen it happen. Or they make a lot of money, sometimes people's character can change a bit or the true colors come out and they act unprofessional or they act obnoxious, whatever it is. All this is alleged right now and it could be subject to. To interpretation. But the lesson here for found this is like a really important one for founders. If any of this is true and they treated the guy really poorly, they wanted him to work like absurd hours. Like it's what I mean, if you're in a startup, obviously you expect to work 50, 60, 70 hours a week. That's obvious. That's why you get in stock options and you have that opportunity. You don't have to work there. You can work for another company that requires 20, 30, 40 hours a week. You'd be a consultant. There's many opportunities out there for, for talented people.
- [38:48]
Alex Wilhelm
Making fun of people's accents is just unnecessary. And I think.
- [38:52]
Jason Calacanis
Who is making fun of whose accent?
- [38:54]
Alex Wilhelm
Jared? Well, the guy who's complaining about the job in question also. Okay, this.
- [39:01]
Jason Calacanis
Oh, I see. He said duelers. I mean, as if that's an Indian way of saying it.
- [39:06]
Alex Wilhelm
I don't be rude about people's appearance or accents. And then your arguments and complaints hold a lot more weight. But this is how you generate sympathy for the people you claim treated you poorly.
- [39:15]
Jason Calacanis
Yeah. So anyway, the thing has obviously gotten ugly, as they say in the business, as a technical term. The lesson is for the founders here, the employees are going to do things employees do. Did you see this like crazy video from Conde Nast where a bunch of people confronted. It was in the wrap. Somebody pull it up. When the producers kind of related. Not only can founders get ahead of their skis, employees can get ahead of their skis. So as you're saying here, like, you know, saying something that could be perceived as racist. I don't know if that was his goal with it. When he said dollars. I don't know if that's like making fun of an Indian accent. I don't even know if these guys have Indian accents. They could just be Americans who are of, you know, they could be second generation Americans. I don't know if they have any.
- [39:57]
Alex Wilhelm
Here's that either. Conde Nast video. Jason, here's the.
- [39:59]
Jason Calacanis
Yeah, so this Conde Nast video is kind of like related. Conde Nast workers surrounded the HR guy's office to give him a hard time. It's like 10 people outside his office, like, confronting him. And then he's like, yeah, you got to go back to your desks at work. And they're like, well, we want to talk to you. And these guys are all part of a union. They could just have the union do it. No, like, one of the guys is like chasing him down the hallway and they're videotaping it like this doesn't seem.
- [40:23]
Alex Wilhelm
That confrontational to me though, because I saw the commentary.
- [40:26]
Jason Calacanis
Are you crazy?
- [40:27]
Alex Wilhelm
Just standing. I mean, I don't know. They're not. They're not in his grill. They're kind of standing down the.
- [40:31]
Jason Calacanis
There's 10 people who went to the HR office as a group is easy to fire everybody instantly for doing something like that. If you really want to have a meeting. 100%. 100%. It's like doing a sit in or something like that. If you're. If you have a union.
- [40:48]
Alex Wilhelm
Yeah.
- [40:48]
Jason Calacanis
And you have complaints, you go to the union, the union represents you. That's why you pay the union to represent you. You don't intimidate the person by sending 10 people up to their office who don't have a meeting and demand a meeting.
- [41:00]
Alex Wilhelm
I think the difference here is I'm just familiar with journalists, and a group of journalists in a hallway is the least intimidating thing. They're not a vibe.
- [41:08]
Jason Calacanis
Okay, I got you there. Yeah. I'm not saying, like, these guys are gonna like, storm the Bastille here.
- [41:12]
Alex Wilhelm
Right.
- [41:12]
Jason Calacanis
They're gonna take the. They're not gonna take the castle. Yeah, I gotcha.
- [41:15]
Alex Wilhelm
Worst guys are gonna hold a little signs that say, like, you know, respect us.
- [41:18]
Jason Calacanis
Yeah. And if you wanted to go on strike and do a walkout, that's fine too. You go walk out of the building, but you don't go surround the HR guy's office with 10 people. It's just an easy, quick way to get fired. Everybody there gets fired, and I think did, and rightfully so. Like, what are we doing here? You're at work. Just work. And then if you need to have a complaint, you. There's a way to do that. You go to the HR department, you say, hey, I'd like to File something. I've got a complaint about this. Or you write an email or you talk to your union. Like, literally, these writers at Condens have a union for that explicit purpose. So a lot of this has to do with employee relationships with management. That's what the two stories have in common here. In one, the employees are acting completely inappropriately, you know, intimidating the HR guy who's like, yeah, if you want to do a meeting, this is not the way to do it. 10 on one with your cameras out, like we're at a concert or something. In this case, also, you're hiring people. You're asking them to move across the country with like two or three days notice. They have to start now. And you don't even shake the guy's hand or you don't have any spree to corpse here. And you don't have like a treat him like a human, what are they going to do? Like, if you put people in that position, they're going to take whatever power they have. The power he has here, this Jerry kid, Jared gentleman, his power is to say, I think the numbers are bogus. Now, this guy, if he's wrong, if Jared's wrong, he damaged this company severely. He's got a lawsuit against him.
- [42:51]
Alex Wilhelm
Oh, if he made that stuff up, he's in big trouble.
- [42:54]
Jason Calacanis
Yeah, A lot of people. Slanderous.
- [42:56]
Alex Wilhelm
Oh, yeah. Oh, God, yeah. Oh, yeah. Oh, man. Like, this is just messy. $61 million is multiple venture capital funds, chipping and money, each of which has their own legal firm on retainer. So, you know, feel free to slap the bear. Just make sure you have the receipts or whatever the quote from the wire about coming at the King is.
- [43:14]
Jason Calacanis
They would not. In that situation, the VCs would just let the company handle. They wouldn't use their attorneys, but they could definitely refer you to one. Sure. The company here. I think what this all points to, which is, I think what you were kind of trying to get me to say is we are at a peak level of entitlement and bubblishness in the industry.
- [43:35]
Alex Wilhelm
Yes.
- [43:36]
Jason Calacanis
When you have a bubble and there's one guy at Google getting paid millions of dollars a year, and then he's writing spicy stuff on the internal chat. You saw that happening last week. Or the employees at Conde Nast are doing what they're doing. This situation, Sam Altman saying he's going to buy $1.4 trillion in service and data centers, but he's got 20 billion in revenue and they're losing 20 billion a year or 10 billion a year like this is peak bubble behavior. We are in a weird bubbly time now. And what people happens, the reason they call it a bubble is like it doesn't make a lot of sense. That's all that's happening right now. But for your business, everybody else's business, if you have real customers paying you money for a product or service that's delighting them or getting shit done, you're going to be fine. But yeah, and also this might be a company being underfunded. Like what does this company need $61 million for exactly? It's a seed stage company. It's a Series A company. It seems like it's a new company and that means they have to hire people and have this unrealistic expectation and do unnatural acts. It does feel like maybe they even have too much money.
- [44:43]
Alex Wilhelm
Seems like they have too much money. It seems like every AI company with a pulse has too much money. I don't know what they're going to do with it.
- [44:49]
Jason Calacanis
Well, no, no. If you had a company that had product market fit and you said, hey, we're going to exp five cities. Yeah, yeah, put it in five languages, we're going to hire a sales team in each, that would actually make a lot of sense. But I got the sense this was like a Series A.
- [45:02]
Alex Wilhelm
This was a Series A led by Redpoint smart folks over there, just to give giga shout out here, Giga AI if you want to take a look at it. And you know they claim that they're handling quite a lot of calls. So in theory they have a product that works.
- [45:16]
Jason Calacanis
Well, we don't know that. We don't. I mean at this point, like we don't know anything about the company. But you know, that's where I'm kind of looking at this saying I wonder if this company just has too much money and not enough product market fit. I'm just purely speculating here. Well, as to what's going on.
- [45:31]
Alex Wilhelm
$61 million. Series A's are abnormal historically and Series A's used to have a certain size for a reason. The Series A was the point in which you took your sales motion and made it repeatable, built out your go to market team, etc. And you raised 10 million back in the day, not 61. I just don't know why you need that much money. But hey, maybe I'm old fashioned, I guess.
- [45:50]
Jason Calacanis
There's a story here. Giga's plan to use some of the capital fund and expansion into more regulated industries. Healthcare and finance company deploys its entire system on the client's own cloud infrastructure using open source models. Okay, yeah, maybe they have to buy some on prem. Maybe it's an expensive service to deploy.
- [46:12]
Alex Wilhelm
But there are a couple companies out there, Jason, that do have product market fit and are killing the game. I want to highlight three from the Twist 500. I'm thinking about next year. I'm thinking about the IPO market, trying to think about who might be going out in 2026, early 2027. The first name that I want to bring up is Ledger. They make those little crypto cold wallets, which is very interesting to me. And I thought this was a cool company, but not a venture scale business. It turns out that I'm wrong. So Ledger told the Financial Times that it reached hundreds of millions of revenue this year. They've sold 7 million other little ledger devices that are physical. They claim to secure more than 20% of the world's crypto. And they last raised at a $1.4 billion valuation, which means that they have a maximum revenue to valuation multiple of 14x if it was just 100 million. Exactly. So I think this is a very impressive company and could do very well for Molten Ventures, Samsung Ventures and 50T. And they're expanding. I looked into this because I'm curious, you know, how is a hardware business venture backable? They're expanding into their own wallets, apps and cards. But I think it just goes to show the maturity in the crypto space and that there are some really big companies built in it that are not only doing stablecoins. Yay. So Ledger, a unicorn that's going to, I don't know, could listen to everyone. I love that.
- [47:32]
Jason Calacanis
If it's doing hundreds of millions of dollars, it is at the bottom end of capable of going public. Like I wonder if this $60 or $150 stick. And I guess some of them could be even $250 if they've sold 7 million of them at a hundred dollars each or $150 each. Yeah, it's. They could have, they could have sold over the last couple of years 500 million, 750 million of these.
- [48:01]
Alex Wilhelm
Oh yeah.
- [48:02]
Jason Calacanis
Worth of these. I don't know what they margin that is 20%, 10% on hardware. There must be some other businesses here like a subscription that comes with it or maybe they get transaction fees. I'm guessing there's some sort of marketplace business here behind it.
- [48:18]
Alex Wilhelm
So that's why I brought up their two cards they have with MasterCard because that brings people that hold their crypto on their ledger devices and their ledger wallet and ability to spend it in the real world. And as you and I both know, interchange revenues can add up rather quickly. They're a key driver of many fintech companies, your chimes, your ramps, etc. So there's a business there. And also I think that because their crypto wallet allows people to stake and I think even lend their crypto while keeping it secure, there's another fintech business there. But I just think they have a great foundation in hardware and if they can convert that into a recurring software business as well, Jason, then they're going to be playing on both sides of the. The bits, bytes divide and. Great.
- [48:55]
Jason Calacanis
Yeah, they've been at it since 2013 so this company's been around a while. Wow.
- [48:58]
Alex Wilhelm
Super cool company. Next up, 1Password. Sticking to the security theme. They told, I think it was fortunate or Forbes that they've crossed the 400 million ARR mark. And that caught my eye because they were at 250 million ARR. I think was at the end, no September 2023. So they've grown 150 million ARR in the last roughly 2 years, give or take. They did that Jason, while being cash flow positive. So they've grown pretty effectively. They're now at IPO scale. 400 million ARR. That's enough in 2025, right?
- [49:30]
Jason Calacanis
Yeah, I mean most people are saying like a billion is the bogey now, so why the. The low end is you know like 3, 4 or 500 million and this one is not high growth, it's medium growth. Right. Like so if they added 150 or 250, they added, you know, whatever, 75 million a year. It's not like doubling, it's growing 40% a year or something. Still a decent business. I do think there's headwinds against these businesses because I, I seem to have every single device and browser and operating system competing to store my passwords.
- [50:08]
Alex Wilhelm
Yeah.
- [50:09]
Jason Calacanis
But it's a business to business business. These tools are being used by small, medium sized businesses a lot.
- [50:17]
Alex Wilhelm
Yeah.
- [50:17]
Jason Calacanis
Whether it's 1Password LastPass, other ones. So it's, it's like a business to business SaaS if these two companies, both of them on the, you know, more modest size when compared to the Coinbase's Airbnbs, you know, even the Reddits, these are smaller than those. These don't have a billion plus in revenue. So we think Reddit actually had under a billion too at the start. So these are on the Smaller side. It would be great to see these be able to go out and have a chance in the market and maybe they figure something out and they could become super high growth.
- [50:51]
Alex Wilhelm
The business to business point is very good. Jason1Password said that they had over 50% of their revenue in 2023 came from B2B and now it's over 75%. So they're increasingly focused on the up market versus consumer if you will. And they said that they have a 70% compound annual growth rate amongst customers spending over 100k. How do you do that? Well, they're working on securing AI agents and giving them identities. So I think that's their growth business. And they're competing with startups like Asterix and Intro Security that are also working on AI agent identification and permissions.
- [51:28]
Jason Calacanis
The real reason you have that business to business growth is if your customers are adding employees or not Every employee is on one password yet you're landing and expanding. Right. So most people who do a B2C and a B2B business, they'll start out with the B2C, they'll perfect the product, the person brings it to work with them. They tell their friends now there's four people out of a hundred people at this business using it and somebody says I got to get control of this. And then you make a dashboard that allows some IT manager to see everybody who's using it, make sure they have everything backed up, that it's got SoC2 compliance, shout out to Vanta and all that dialed in. Right.
- [52:08]
Alex Wilhelm
All right, one more from the Twist 500 that is looking like IPO prepared for 2026 Mercury. Now I, I'm actually I should disclose a Mercury customer in my little business but they're a technology friendly neobank Jason and what's really cool is they reached $650 million worth of annualized recurring revenue month times 12 not arcs. They're not a software subscription business at the end of Q3 and they were at about 500 million annual run rate at the end of 2024 that means they've added about 50 million in annual revenue a quarter. Not hypergrowth, not OpenAI, not cursor but very solid. And I did some fun math. So 50 million in annualized revenue a quarter is adding 16.7 million a month or for fun they're adding about $555,000 worth of annual revenue per day. Quite impressive. Company was only valued at 3 and a half billion post money earlier this year Jason by Sequoia feels cheap but then again Fintech companies, bank things don't tend to trade at software multiples. I'm just kind of curious, would you buy into Mercury right now? At a three and a half billion.
- [53:17]
Jason Calacanis
Dollar post, it feels like they really have a great product. Everybody I talk to who uses a Mercury bank loves it.
- [53:26]
Alex Wilhelm
Loves it. It's great.
- [53:27]
Jason Calacanis
It reminds me in some ways of Robinhood or Uber. Like if you get really good at building apps and you keep adding features and you got that product velocity, you keep delighting the customers, as I always talk about, and it's very sticky. People don't change banks unless, yeah, the bank pisses them off. I fire banks every couple of years and it happens. It's always the same thing. I'm trying to do a wire and I can't get the wire done. Or I'm trying to wire money to the cage in Vegas because I'm playing at a poker tournament, I can't get it. Or I'm trying to get $10,000 in cash for something, I can't get it. And I just say to one of my people, okay, and I'm like, literally on the CC chain with some bank and I'm like, close all of our accounts immediately today. Because I keep three banks. Like, I literally always have three banks, sometimes four when I have every corporate entity and I'll just put whatever the minimum is in three of them. And then we use one as the primary and have those three as a backup.
- [54:25]
Alex Wilhelm
Keeping them warm.
- [54:26]
Jason Calacanis
Well, yes, because they're. What if you have another situation like Silicon Valley bank and it's FDIC insured with a certain amount in each, or if a bank goes down, you get locked out of your account. Let's say you happen to have a couple of million dollars in a business, sure. You probably would be a good idea to keep some in the primary and keep some others in the other. Then also, if the banks aren't giving you what you need, I. E, like wires aren't going through or they just are not giving you the customer support, you know, somebody at each bank. Now this takes a little while for an operations person at your company to do, but it's well worth it. So if you have but one bank account at your business, Alex, I'm assuming.
- [55:06]
Alex Wilhelm
You have one for my little company. Yes.
- [55:09]
Jason Calacanis
Yes. And what would it cost you to have a second, like two hours of your time? So if it takes two hours of your time and you're in year two or three of your business, not a bad idea. Not a bad idea to have a second one. Now that's for, you know, a solo entrepreneur, you know, like now, if you've got a business with 50 people, you have one bank. Does that make any sense?
- [55:27]
Alex Wilhelm
Heck, no. What's the old thing about digital copies? If you have one copy, you have no copies of a file. If you have one bank, you may have no bank.
- [55:34]
Jason Calacanis
Right, exactly. So something happens to your bank, you got problems. And then it's also just delightful because when I send that email, you know what happens? I get what I want immediately. All of a sudden, it's escalated because I just say, please close. Transfer all of the money out of this account to our other bank.
- [55:51]
Alex Wilhelm
Yes.
- [55:51]
Jason Calacanis
And close our accounts today. Please confirm when this is done. I literally had this happen. I was. I went to. I went to a bank to get money to go play in the World Series of Poker. You know, got some cash in the bank. I need 10,000. Oh, you only take five out. That's the limit. Nothing I can do. Sorry. That's our policy. I said, okay, great. Are you the manager? This is. No, I said, okay. Can you get the manager over there? Okay, manager comes over, two of them. I said, okay, I'd like to close this account. Give me a cashier's check for the entire amount. I said, what? It's like, Yeah, I need $10,000 right now. I'm going to play in the World Series of Poker. I'm late. I got a flight. Close my account right now. Give me a check. The guy was like, one moment, came back, handed me the money.
- [56:29]
Alex Wilhelm
I mean, because there's rules. I don't typically. I'm not mad at the guy who's just following policy. I'm just saying that banks are not designed for human happiness.
- [56:38]
Jason Calacanis
I'll be honest, the guy could have said, like, let me just talk to my manager. Let me see what I can do for you. I think if you're in a customer service position and you're.
- [56:45]
Alex Wilhelm
Yeah, I think it's actually a really good point to bring up because Mercury, when they talk to Fortune about this new revenue milestone, they said a lot about trust because they said they had several customers, more than $100 million with them.
- [56:57]
Jason Calacanis
What? Yeah, Mercury. I thought Mercury was like, for small, mid, mid sized businesses, that's a large business.
- [57:04]
Alex Wilhelm
We were just talking about going up market. They're doing that, Jason. And so they said, like, look, we need to be very, very, very stable. And that's why they're running the business on a profitable basis. They're both Gap profitable and EBITDA positive for the Last three years and they're just approaching this, I think with a different mindset than many high growth startups because they need to be more in the, in the trust gain than the growth game. I think Mercury is really a smart company. I wish I could give them all of my money.
- [57:31]
Jason Calacanis
Money.
- [57:32]
Alex Wilhelm
Sadly, I'm not a VC and I wasn't around five years ago to do that, but a great company. One to watch. And another twist. 5002026 IPO candidate. All right, Justin, real quick before we go. Gamma just raised $68 million now valued at 2.1 billion. And Dreeson led the round. This is of course for the AI presentation maker. They're at 100 million in revenue, 70 million users and 600,000 of which pay for subscriptions. If you do the math, 100 million ARR. 600,000 subscribers, about $14 per user per month. Your thoughts?
- [58:02]
Jason Calacanis
Wow, I didn't realize that business was so big.
- [58:04]
Alex Wilhelm
I know, me either.
- [58:06]
Jason Calacanis
I should know this business is so big because I do see a lot of founders using it as their presentation software now. And founders usually use whatever the best, most innovative product is or they usually get the best deal, whatever combination of offering and so yeah, that's impressive and looks like they have a lot of room to grow. If they have 70 million users and they've converted but 600,000 of them to be 1%, they should be able to get that number to 5% just from the existing user base by. And they may not have been super aggressive in converting them. Sure. So it sounds to me like they could have 3 million paying subscribers soon and that would be, gosh, five times as much. This, they could be doing 500 million, this could be another IPO candidate.
- [58:57]
Alex Wilhelm
So I was just thinking I should have merged this into the IPO section because this is a company that could be, I mean, let's be honest, late 2027 probably, but on that path. And I think it just goes to show that the AI boom is not just open AI, not just data centers. There's a lot of application layer companies too. And Gamma, I mean, Dear God, dude, 100 million ARR again, 10 years ago, this would have been the breakout company of its generation. We'd be talking about its IPO in revered terms. That was just kind of another great success. But I love seeing nine figure startups. Makes me very happy.
- [59:28]
Jason Calacanis
Yeah, there are. People are getting to nine figures faster than ever. And I think a really important lesson here to think about is taking on PowerPoint or you know, Google presentations or slides. I Guess it's called, you know, in 2023. 2020. You know, whenever they started doing this, you might think, oh, that's crazy, like making an AI one. But, okay, make an AI version of Microsoft Excel. Make an AI version of Microsoft Word. Every single thing with an AI first approach could make something that is just super delightful. And this is just. With 50 employees. Like 52 employees, it says here. So that means they're making 2 million per employee.
- [60:17]
Alex Wilhelm
Well, that's how they're. That's how they're profitable, Jason, because they have an insane ARR per headcount. But this is the new model. I mean, you know, we've talked so much about the ability of AI to make individual workers more productive and you get more done with fewer people. Well, how about 100 million ARR with 52 staff? I mean, that is an efficiency that I think we never saw before.
- [60:37]
Jason Calacanis
All right, my question for you Poly Market users betting on OpenAI's IPO.
- [60:42]
Alex Wilhelm
Okay.
- [60:43]
Jason Calacanis
And their valuation. It's got a little bit of valuation. They got a little bit of volume going on this one.
- [60:49]
Alex Wilhelm
Yeah.
- [60:50]
Jason Calacanis
So what do you think? What are they going to go public at? 500 billion? 500. 750. 750 billion. Did we do a bet on this.
- [60:58]
Alex Wilhelm
Already, Jason and I? Yeah, you and I did this. We set the the over under at 1.25 trillion.
- [61:04]
Jason Calacanis
I took the under.
- [61:05]
Alex Wilhelm
You took the under. I took the over. But what blew my mind was that the rising category of popularity is wagers between 500 and 750 billion, which is essentially flat from where they are now. This Poly Market is set up in such a way, Jason, that you can also bet that they won't go public by the end of next year. But that's going down as a, as a wager, while other valuations for a pre 2026 IPO are going up. So people are betting more that it will list and less that it won't. And you could say, hey, isn't that, isn't that bullish? Don't people then therefore think that OpenAI will be IPO ready? I think it's bearish. Because if people are betting that it's going to go public next year at a valuation that isn't impressive, to me, that implies distress and a need for more capital.
- [61:51]
Jason Calacanis
It's also saying that it's not going to have an IPO by December 31, 2026. That's the likely case. 67%, which that's problematic if they need to raise more money for data centers and they need liquidity.
- [62:05]
Alex Wilhelm
You can say that as positive or negative, depending on how you think about it. Are they going public because they're so strong, or are they going public because they're so weak and need the cash? You can kind of see it either way.
- [62:15]
Jason Calacanis
Yeah, I think it's they need to go public because they're going to need to raise that money. They were going to raise 60 billion and their IPO was the whisper number.
- [62:24]
Alex Wilhelm
Yeah.
- [62:25]
Jason Calacanis
Which is a lot of money to raise all at once. And they're going to need that 60 billion and maybe they raise 100 billion. So not raising means they don't have $60 billion next year, which means they'd have to raise money from the private market again, which. Who's going to put money in and at what valuation?
- [62:43]
Alex Wilhelm
Thrive Capital, at any valuation, I think, is the answer to that so far, at least.
- [62:49]
Jason Calacanis
I don't think so. I think at 500 billion, I don't know if they come back to the trough again and they were buying secondaries from employees at that valuation, I don't know that they come back at the trough again. I think people are gonna say, yeah, you know, maybe at under 500 billion or at 500 billion they do, but I don't know. Who doesn't own shares in OpenAI besides the public. Right. Public definitely will want to buy it because it's such an incredible franchise. But I wonder if, like private market investors, how many more are left? How many more sovereign wealth funds that want to put 10 billion into this? A billion into this? How many Nvidia's are left that want to put 10 billion into it, or 5 billion into it, or certainly venture firms. This does make me a bit concerned. Yeah.
- [63:43]
Alex Wilhelm
Can I draw an analogy? You know, we talk about startups raising at a valuation that's so high, they become unacquirable, maybe in the 1 to $5 billion range. Is it possible to become so richly valued in the private markets that you're essentially uninvestable unless you go public?
- [64:01]
Jason Calacanis
Yeah, that could happen. Where the private market investors, the last ones in, have, you know, placed their bet, and the only thing left is retail and. And, you know, the folks who like to own public stocks. Right. It could be hedge funds, it could be endowments, whatever that want public market stocks that they can come in and out of. Perfect example would be Uber. You know, Masayoshi comes in, pays a really high price. I sold some shares to him when it was a private company at that price. And then it goes public after that. And that was like a really interesting kind of dynamic because who's left after Masayoshi san? The public. Right.
- [64:38]
Alex Wilhelm
Well. And who's investing in OpenAI in 2025? Masayoshi Son and SoftBank.
- [64:43]
Jason Calacanis
Correct.
- [64:44]
Alex Wilhelm
Maybe that's an indication.
- [64:45]
Jason Calacanis
Then Thrive is like the last investor before you go public, it seems like now. So I think this all to me says they're going public.
- [64:54]
Alex Wilhelm
Okay, well.
- [64:55]
Jason Calacanis
And they're going public in 2026, which makes it weird that 67% of people don't think they're going public in 26.
- [65:01]
Alex Wilhelm
Well, you and I have our bet. If they're over 1.25 trillion, I think it was end of first day's trading. Then I think you owe me a hundred dollars. Otherwise, you aundy.
- [65:10]
Jason Calacanis
All right, that's another this week in startups in the cat. We'll see you next time. Bye. Bye.